Page 14 - Public Citizen News November-December 2013

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14
November/December 2013
Public Citizen News
The following are some highlights from our recent media coverage.
in the spotlight
Tax loopholes that enable cor-
porations to deduct CEO pay
in excess of $1 million could be
costing American taxpayers hun-
dreds of millions of dollars, ac-
cording to a report released Nov.
12 by Public Citizen.
In 2012, the 20 highest-paid
CEOs were paid base salaries to-
taling $28 million but received
performance-based compensa-
tion totaling $738 million, Public
Citizen discovered.
For executive pay above $1 mil-
lion, publicly traded companies
may deduct only that which is
based on performance or other
incentives. If these companies
paid the statutory 35 percent cor-
porate income tax rate, their use
of the performance-based com-
pensation loophole for just those
20 CEOs would have cost Ameri-
can taxpayers $235 million.
“Especially during a long-term
recession giving rise to major
cuts in public services, and af-
ter American taxpayers bailed
out Wall Street to the tune of
trillions of dollars, it’s uncon-
scionable that we continue to
subsidize CEOs’ exorbitant sala-
ries,” said Lisa Gilbert, director of
Public Citizen’s Congress Watch
division.

In 1993, when the CEO-to-
median worker pay ratio was
about 200-to-1, section 162(m) of
the Internal Revenue Code was
amended to limit publicly trad-
ed corporations from deducting
more than $1 million in compen-
sation. However, this amend-
ment included a loophole that
allowed corporations to continue
to deduct certain types of execu-
tive pay.
This loophole exempted com-
pensation that is “payable solely
on account of the attainment of
one or more performance goals.”

After these changes took effect,
corporations increased the use of
performance-based pay, which
remained tax deductible beyond
the $1 million limit, assuming
certain conditions are met.
Report Shows
Taxpayers Are
Subsidizing
CEO Bonuses
Worse still, “performance-
based” incentives sometimes
only require achievement of rou-
tine goals or are arbitrary. For
example, Robert A. Kotick, the
CEO of Blizzard Activision Inc.,
could collect a cash bonus equal
to 200 percent of his base salary
if the company achieved only 75
percent of its target operating
income.
There is a clear solution. Pub-
lic Citizen urges Congress to pass
S. 1476, the Stop Subsidizing
Multi-Million Dollar Corporate
Bonuses Act, introduced by Sens.
Jack Reed (D-R.I.) and Richard
Blumenthal (D-Conn.). This bill
would eliminate the tax exemp-
tion of commission-based pay,
expand the universe of compa-
nies covered by the provisions of
162(m), and — most important —
eliminate the performance-based
compensation exemption to the
$1 million deductibility cap.

The report is available at
www.citizen.org/ceo-pay-tax-
loophole-report.
“Especially during a
long-term recession
giving rise to major
cuts in public services,
and after American
taxpayers bailed out
Wall Street to the tune
of trillions of dollars,
it’s unconscionable
that we continue
to subsidize CEOs’
exorbitant salaries.”
Lisa Gilbert
director
Public Citizen’s
Congress Watch
division

Robert Weissman, Public Citizen
president:
On the need to protect civic
space from commercialism: The Balti-
more Sun. On the destructiveness of
alcohol advertising on public transit:
The Sacramento Bee. On Congress
funding piecemeal measures dur-
ing the government shutdown: The
Hill. On the Trans-Pacific Partnership
(TPP) including long-term monopolies
for drug companies: The Hill. On Wall
Street’s attempts to weaken the Dodd-
Frank financial reform law: Columbus
(Ga.) Ledger-Enquirer. On the regula-
tory system being broken: Talk Radio
News Service.
Lori Wallach, director of Public
Citizen’s Global Trade Watch:
On
domestic discontent with the TPP: The
Wall Street Journal. On global leaders
admitting that there’s no clear path
to a TPP deal: NPR, Politico. On the
destructive aspects of the TPP: “De-
mocracy Now!,” Truthdig, Counter-
punch, Utne Reader, Alternet, WPKN
(Bridgeport, Conn.). On the demise of
Fast Track trade authority: The New
York Times, Politico, The Washington
Post.
Dr. Michael Carome, director of Public
Citizen’s Health Research Group:
On
the inadequacy of congressional bills
addressing drug compounders: The
Tennessean, The Kansas City Star,
The Hill, Pharmacy Practice News,
PharmaLive, Talk Radio News Service,
MedPage Today. On drug companies
buying access to invitation-only meet-
ings with Food and Drug Adminis-
tration (FDA) officials: Milwaukee
Journal Sentinel, MedPage Today,
The Rochester Democrat & Chronicle.
On the U.S. consuming 99 percent of
the world’s hydrocodone: Milwaukee
Journal Sentinel.
Joan Claybrook, president emeritus:
On a delayed rule for improved rear
visibility in vehicles: The Washington
Post, Bloomberg, Time, The Car Con-
nection, CNBC, Politico, AOL Autos.
Dr. Sidney Wolfe, founder and senior
adviser for Public Citizen’s Health
Research Group:
On the connection
between talcum products and ovarian
cancer: The New York Times. On why
the FDA should stop an advisory panel
chair from speaking at a pharmaceu-
tical industry conference: Reuters,
Consumerist, MedPage Today.
Tom “Smitty” Smith, director of Public
Citizen’s Texas office:
On Public Citi-
zen’s report on construction problems
on the Texas segment of the Key-
stone XL pipeline: ClimateProgress,
DeSmogBlog. On Texas’ obligation to
address climate change: The Associ-
ated Press. On the need to scrutinize
who is donating to elected officials:
Houston Chronicle. On a Texas state
senator who used money from his
PAC to pay his radio station: The
Associated Press. On a Texas oil and
gas regulator getting campaign money
from the oil and gas industry: Dallas
Observer. On research demonstrating
the problems caused by air pollution
from coal plants: The Dallas Morning
News.
Tyson Slocum, director of Public Citi-
zen’s Energy Program:
On the dangers
of having the Commodity Futures
Trading Commission at low capacity
during the government shutdown: The
Washington Times. On how innova-
tion in batteries will change technol-
ogy: Fox Business. On state efforts
to boost electric car sales: Fox News.
On the wait for a new Federal Energy
Regulatory Commission nominee:
Politico. On Obama’s new climate
change task force: SiriusXM’s POTUS
channel.
Lisa Gilbert, director of Public Citi-
zen’s Congress Watch division:
On
furloughed workers inadvertently
being paid double because of the
government shutdown: CNBC, USA
Today. On the need to ensure corpora-
tions can’t deduct fines on their taxes:
Reuters.
Allison Zieve, director of the Public
Citizen Litigation Group:
On a U.S.
Supreme Court case over equal treat-
ment for married same-sex couples:
Windy City Media Group, The Bay
Area Reporter.
Craig Holman, government affairs
lobbyist with Public Citizen’s Con-
gress Watch division:
On increased
campaign contributions by Northrop
Grumman coinciding with legislation
facing Congress over funding for a
drone model: Bloomberg. On mem-
bers of Congress donating or forgoing
pay during the shutdown: Christian
Science Monitor. On paying for
congressional travel: Chicago Tribune.
On the revolving door for government
lawyers: Bloomberg. On free football
tickets given to Texas lawmakers: The
Associated Press.
Paul Alan Levy, Public Citizen at-
torney:
On Public Citizen’s represen-
tation of a man suing the National
Security Agency and Department of
Homeland Security for the right to
make merchandise parodying the
agencies: The Washington Post,
NPR’s “All Things Considered,” Ar-
stechnica, “HuffPost Live.”
Scott Michelman, Public Citizen at-
torney:
On the need for rear visibility
in automobiles: USA Today, Fox 5
(Washington, D.C.), Fox 4 (Kansas
City), Automotive News, Cars.com.
Bartlett Naylor, financial policy advo-
cate with Public Citizen’s Congress
Watch division:
On Wall Street banks’
dishonest accounting: Salon. On U.S.
Sen. Kirsten Gillibrand’s (D-N.Y.) cozi-
ness with Wall Street: The Atlantic.